Exam 1 and 2 ENT

In the context of supports for new businesses, why are established businesses often hesitant to buy from a start-up business? because it is not clear if the new business will be able to fulfill an order or service a product in the future because small businesses are typically family-run establishments, making them unreliable in the long run because the supply structures of established businesses are resistant to incorporating new supply sources because it is more profitable for established businesses to fulfill any requirements through resources already present within their organizational structures

because it is not clear if the new business will be able to fulfill an order or service a product in the future

In the context of business risks, how can an entrepreneur identify competitors to a new potential business? by conducting a brainstorming session with other entrepreneurs by observing the market and identifying companies that have seen the maximum growth in the past quarter by performing a gap analysis evaluation to identify potential competitors by observing what potential customers do to satisfy their current needs or wants

by observing what potential customers do to satisfy their current needs or wants

When a small business owner pays an individual a percentage of sales, this is called a ________. commission salary paycheck bonus

commission

Which of the following statements is true of the commission compensation system? creates frustration when a firm either does or does not change a commission program to reflect the growth of the firm. It creates a rigid compensation system where abuse is minimal, and it removes the frustration for employees and the entrepreneur. It creates a uniform system in a firm where every employee is paid the same amount as commission, and it is independent of their performance. It creates an overall healthy environment within a firm when the salespeople are very focused on their commission

creates frustration when a firm either does or does not change a commission program to reflect the growth of the firm.

in the context of financial tools, a business can quickly generate cash in the short run by selling accounts receivable at a discount to another company. This is a technique known as asset leasing crowdfunding leasing factoring

factoring

Incubators for small businesses include all of the following except common receptionist. financial loans. legal expertise. space.

financial loans

All of the following are benefits of a Subchapter C Corporation EXCEPT health benefits paid by the corporation. no limit to the number of shareholders. owners being treated as employees of the company. fringe benefits being treated as income.

fringe benefits being treated as income.

What term is used to describe the process of systematically examining the difference between what is expected and what occurs? economic analysis gap slack analysis difference analysis gap analysis

gap analysis

Which of the following is not a personality dimension of the Big Five test? agreeableness individualist extroversion conscientiousness

individualist

The process of generating ideas should occur in a(n) ________ manner and not in a(n) ________ fashion. process; interactive linear; interactive interactive; linear linear; process

interactive; linear

Which of the following is not included in the second column of labeled categories in a gap analysis time inventory resources nonfinancial resources Finances

inventory resources

A company seeks to have inventory present only shortly before it is used. This method of inventory control is called just-in-time inventory. monitoring inventory. accrual inventory. balanced inventory.

just-in-time inventory.

Carla and John enter into a partnership and form a business. Under the partnership agreement, Carla is directly responsible for the management of the firm and its liabilities. John has a minor financial stake in the firm and works there, but he is not held responsible for the taxes and debts owed by the firm. In the context of the legal forms of business, Carla and John have formed a ________, Subchapter C Corporation general partnership limited liability partnership sole proprietorship

limited liability partnership

efore establishing a new business, the first thing founders should do is list their personal skill sets. hire a lawyer. analyze the market. obtain financial support.

list their personal skill sets.

In the context of business designs, one of the advantages of a corporation is that when it suffers losses, the founders will be expected to pool their personal finances to rescue the business. lose only their investment in the business rather than their life's savings be absolved of responsibility for the debts of the company. surrender control of the company to investors.

lose only their investment in the business rather than their life's savings

One of the accounting records maintained by Visors Inc. lists the number of regular work hours worked by its employees, the overtime hours worked by various employees, and the firm's overtime pay rate. This record also tracks salary checks issued to each employee. This record is most likely a(n) ________. inventory account accounts payable record payroll record expense account

payroll record

In an interview, an interviewer can ask questions about arrest record. religion. disability. prior convictions.

prior convictions.

When should a new business owner ensure there are sufficient financial resources to operate the business? opening day first payroll after six-month review prior to the start

prior to the start

Small companies have flourished in the United States because they employ more skilled people than larger businesses. have better organizational policies and procedures. often expand easily in mature industries. respond more quickly to their customers' needs.

respond more quickly to their customers' needs

Trilane Systems is a small business. Its owner, Myra, is also its only employee. She handles the business's operations herself and is responsible for all of the business's income and losses. In the context of the legal forms of business, Trilane Systems is a limited liability partnership. sole proprietorship Subchapter S Corporation. general partnership.

sole proprietorship

Accepting ________ ties a firm to the supplier and usually stops the firm from shopping around for a lower price. funding grants equity funding supplier credit nonequity credit

supplier credit

Borealis Computing is a small start-up firm that needs to purchase essential equipment and supplies to begin operations. Gencent LLC, a larger firm, offers to finance Borealis Computing's purchases. Under their agreement, Borealis Computing will repay Gencent LLC overtime at a specified interest rate. In the context of nonequity funding, Gencent LLC's financing of Borealis Computing's purchases is an example of ________. crowdfunding supplier credit factoring equity investment

supplier credit

The connection between an entrepreneur's skills, understanding of an industry, and the ability to create a competitive advantage such that the sum of the parts of the new business is greater than the individual parts alone is called ________. gap analysis brainstorming opportunity analysis synergy

synergy

Which of the following personality tests was developed by two independent research teams who analyzed data collected from thousands of people? the Myers-Briggs test the Big Five test the Enneagram test the DISC assessment

the Big Five test

Which of the following is an advantage that small firms have over large businesses? the ability to respond quickly to changes critical knowledge spread across the firms' human resources pool the ability to produce services and products quickly and cheaply significant financial resources slack

the ability to respond quickly to changes

A job offer is finalized by ________. the candidate reading the offer the employer putting it in writing the candidate signing the offer a formal handshake

the candidate signing the offer

In contrast to the role of leadership in a typical large organization, the founder of a new entrepreneurial business tends to play a very critical role because the concentration of knowledge tends to be with her or him. the founder tends to be the only worker at entrepreneurial businesses. outside experts generally work with entrepreneurial businesses. the employees of such new businesses tend to be unskilled or unmotivated.

the concentration of knowledge tends to be with her or him.

Which of the following experiences can entrepreneurs evaluate when generating business ideas based on their education? the classmates who made their experience enjoyable the courses they took that were particularly enjoyable the most difficult material in the courses they took the professors whose teaching they enjoyed the most

the courses they took that were particularly enjoyable

In the context of legal forms of business, which of the following is an area in which sole proprietorships differ from general partnerships? where the liability for the firm's debts and finances rests the possibility of bringing in new equity partners how the firm's income and losses are reported on tax forms how much responsibility the owner or owners have for making business decisions

the possibility of bringing in new equity partners

Identify a legal question that an employer can ask during an interview. "Are you heterosexual or homosexual?" "Are you a Republican or a Democrat?" "Do you have a Social Security number?" "Are you married?"

"Do you have a Social Security number?"

The term ________ refers to the fact that women, like minorities, may be hired by large firms but experience limits placed on their advanceme "glass cliff" "glass ceiling" "grapevine" "androcentric"

"glass ceiling"

What is the major difference between a board of directors and a board of advisors? There is no difference between the two. A board of directors has fiduciary responsibility, whereas a board of advisors advises the firm. A board of directors is individuals from outside the firm, whereas a board of advisors is individuals from inside the firm. A board of directors always directs large companies, whereas a board of advisors is usually found in small firms.

A board of directors has fiduciary responsibility, whereas a board of advisors advises the firm.

Identify a true statement about gap analysis. A gap analysis should be completed in a short period of time. One should ignore the financial requirements and the nonfinancial resources that a business needs when doing a gap analysis. The first column in a gap analysis includes a realistic estimation of an individual's personal resources. A gap analysis requires extensive research.

A gap analysis should be completed in a short period of time.

In the context of financing tools available to new businesses, identify a major disadvantage to asset leasing. A new business might spend more money on leasing equipment over time than if it had bought the equipment outright. Major asset leasing companies are unwilling to risk leasing equipment to new businesses. Equipment leasing agreements make it difficult for a small business to upgrade to newer machines when their leased machines become obsolete. Any assets that are leased must be paid for upfront, making the proposition of leasing nearly as expensive as purchasing new equipment outright

A new business might spend more money on leasing equipment over time than if it had bought the equipment outright.

________ states that individuals make decisions that maximize their own individual benefits. Organizational benefit theory Self-fulfilling prophesy Individual benefit theory Agency theory

Agency theory

An example of a benefit a company can offer is 401(k) retirement plans. sick leave. All of the answers are correct.

All of the answers are correct.

In the context of start-ups, new businesses need to be aware of which of the following issue(s)? All of the answers are correct. the establishment of an accounting system how information flows in the business funding and funding level of the firm

All of the answers are correct.

Which of the following items does a payroll record list? All of the answers are correct. base pay gross pay taxes

All of the answers are correct.

What does a potential entrepreneur need to consider when starting a new business? personality orientation risk tolerance All of these choices are correct prior experience

All of these choices are correct

You should not use a cookie-cutter business plan program because All of these choices are correct. a good plan is best developed by the individual contemplating the business, not by a paid consultant. each business plan should have its own voice, feel, and presentation. potential investors are often family members, which makes it critical that the entrepreneur seeks to ensure the chances of success by doing thorough planning and thinkin

All of these choices are correct.

In the context of legal forms of business, identify a benefit of an Subchapter S Corporation over a Subchapter C Corporation. An Subchapter S Corporation can have a larger number of investors than a Subchapter C Corporation. An Subchapter S Corporation pays for fringe benefits of the owners at its own expense unlike a Subchapter C Corporation. An Subchapter S Corporation has more potential for future expansion than a Subchapter C Corporation. An Subchapter S Corporation has limitations in the number and type of shareholders unlike a Subchapter C Corporation.

An Subchapter S Corporation has limitations in the number and type of shareholders unlike a Subchapter C Corporation.

dentify a true statement about the process of generating new business ideas. While generating business ideas, an entrepreneur needs to focus on exploitable market trends rather than use personal experience to inform the process. Family is generally the best source of ideas for a new business.Incorrect As a business idea evolves, an entrepreneur must be willing to develop a new set of skills to make it successful. Entrepreneurs should focus on generating ideas and funding a new business based on them, but they must not become personally involved in its success

As a business idea evolves, an entrepreneur must be willing to develop a new set of skills to make it successful.

Women entrepreneurs are starting small businesses for all but which one of the following reasons? Better ideas for small businesses manage family needs hit the glass ceiling

Better ideas for small businesses

During Eisenhower's presidency, who stated that "what is good for General Motors is good for the nation"? Franklin Roosevelt Charles Wilson Andrew Carnegie Henry Ford

Charles Wilson

In the context of nonequity funding, identify a true statement about loans. Debt holders have a right to a firm's assets if the firm fails to pay off their loans. Banks have traditionally been eager to fund entrepreneurial firms. Equity investors receive proceeds from a filed firm before all other loans are paid off. Banks take a controlling percentage of ownership of any small business they give a loan to.

Debt holders have a right to a firm's assets if the firm fails to pay off their loans.

Which personality test believes that a person is the result of all experiences in his or her life? Insights Big Five Myers-Briggs Enneagram

Enneagram

In the context of legal forms of business, identify an accurate statement about a general partnership. The partner with the largest equity stake makes decisions about the firm's operations. Established partners can bring in new equity partners by surrendering a portion of their ownership position. Owners report their shares of losses or profits independent of their interest in the firm. A single partner operates as the firm's manager and is directly responsible for any debts owed by the firm.

Established partners can bring in new equity partners by surrendering a portion of their ownership position.

A company can use personality testing, even though there is no direct link between the test and the skill set necessary for the job (T/F)

F

A lease need not specify a length of validity as it is assumed to remain in effect as long as a tenant is able to pay for it (T/F)

F

Bonus systems are as well defined as profit sharing and the level of reward is independent of the discretion of an entrepreneur(T/F)

F

Emerging economies are based upon laws. (T/F)

F

Equity investment does not involve selling a percentage of the business to an outside investor. (T/F)

F

In an entrepreneurial business, a job description document is meant to be a formal, highly structured document as it might be in a large corporation.(T/F)

F

In the case of business failure, debt does not need to be repaid. (T/F)

F

Qualitative gap analysis charts require extensive research into markets and business practices to complete. (T/F)

F

The excess resources that large companies tend to have to assist them are referred to as organizational redundancies. (T/F)

F

The generation of ideas for new businesses often occurs spontaneously and automatically.(T/F)

F

The last column of a gap analysis is used to list the categories that are used to analyze each idea. (T/F)

F

According to Thomas Stanley and William Donko in their book The Millionaire Next Door, 50 percent of the millionaires in the United States are self-employe (T/F)

False

In most large corporations, there is no difference between owners and managers. (T/F)

False

The business plan for a small business should be at least 50 pages long (t/f)

False

Which of the following terms describes a plan to exit a small business? an entrepreneurial plan a general departure plan a business plan a harvest plan

Harvest plan

________ is the quantity and quality of human effort directed toward producing goods and services. Human resource management Human knowledge Human power Human skills

Human resource management

Which of the following statements is true of the Civil Rights Act? It allows for the promotion of the differently-abled employees irrespective of their performance. It provides that each and every business must provide unfettered access to all disabled people. It currently applies to all firms with more than 25 employees. It ensures that all individuals are judged according to the discretion of an entrepreneur.

It currently applies to all firms with more than 25 employees.

Which of the following statements is true of the Fair Labor Standards Act (FLSA)? It sets a minimum wage for all workers, including workers on small farms and administrative employees. It allows an entrepreneur to employee children under the age of 15 years if he or she can establish the safety of the working environment. It requires that all nonexempt employees who work over 40 hours a week should be paid at the rate of time and a half. It provides that each and every business must provide unfettered access to all disabled people.

It requires that all nonexempt employees who work over 40 hours a week should be paid at the rate of time and a half.

In the context of legal forms of business, identify a true statement about sole proprietorship firms. These firms can have multiple founders with equal stakes so long as a single individual is considered to be the owner. Because of the limited nature of the growth potential of such firms, any profits they make are exempt from federal taxation. Laws governing business practices do not recognize other equity investors, which limits the growth potential of such firms. Many communities discourage the formation of these firms because their operations are difficult to regulate.

Laws governing business practices do not recognize other equity investors, which limits the growth potential of such firms

________ occur(s) in large companies that have excess resources such as equipment and employees. Unlimited boundaries Organizational resources Limited boundaries Organizational slack

Organizational slack

_______ can be described as a form of nonequity funding where one organization finances another organization's purchasing of physical assets and supplies. Factoring Angel investments Asset leasing Supplier credit

Supplier credit

A community could have an incubator, which is a facility that houses new businesses and provides many critical services for them. (T/F)

T

A petty cash fund operates like a bank savings account. (T/F)

T

A sole proprietorship is where the owner, for legal purposes, is treated the same as the business.(T/F)

T

An advantage of a sole proprietorship is that the owner reaps the benefits and doesn't have to share the equity. (T\F)

T

Assume that an opportunity exists in northern Minnesota. A customer needs a "hand warmer" packet. Mary, a new business owner, decides she has the ability to address this gap because she knows how to produce hand warmer packets. This process is called gap analysis. (T/F)

T

Brainstorming is a creative process in which a group of individuals are brought together and asked to generate ideas related to a specific topic or problem (T/F)

T

Debt, a source of nonequity funding, allows a new business to handle the disparity between when goods must be purchased and when money will be received from a customer to pay for those goods.(T/F)

T

Many large and established businesses are willing to make equity investments in start-up companies (T/F)

T

The Myers-Briggs test is used for personality evaluation (T/F)

T

The insurance coverage obtained by a small business is directly proportional to the cost. As the coverage increases, the cost also increases. (T/F)

T

The reason a business is called a family business is that the owner's family plays a critical role in the success of the business. (T/F)

T

The screening of résumés or applications prior to beginning an interview process for a job and the checking of references is important (T/F)

T

The setting of goals for an employee allows an entrepreneur to judge how well the employee is performing.(T/F)

T

Which of the following laws established a minimum wage for workers? The Civil Rights Act The Fair Labor Standards Act The Sherman's Antitrust Act The Americans with Disabilities Act

The Fair Labor Standards Act

Which of the following is a defining characteristic of venture capital start-ups? The management structure of the business is designed to take advantage of the skills of the founder. The business is oriented toward the personal goals of the founder. The businesses are well-funded by angel investment. The development plan of the business is oriented around positive cash flow.

The businesses are well-funded by angel investment.

dentify a defining characteristic of venture capital start-ups. They generally have a developing organizational structure that is subject to frequent change. They tend to develop operations in multiple locations very shortly after the initial investment. They are usually self-funded or closely funded. They are inherently safe operations whose growth is dependent on the exploitation of knowns in the market.

They tend to develop operations in multiple locations very shortly after the initial investment.

Profit margins are key to successful businesses. (T/F)

True

The federal General Accounting Office did an analysis of the impact of the closure of military bases and discovered that in the areas where military bases closed, the unemployment rate was less than the national average. This is because of the starting up of new small businesses in the areas.(T/F)

True

Today many of the multinational firms in the United States are technology firms that began in the late 1970s and early 1980s (T/F)

True

A potential business owner needs to convey his or her business idea to a prospective investor or lender in ________ minutes. five ten twelve two

Two

In the context of risks to new businesses, identify a true statement about risk tolerance. Entrepreneurs can avoid a majority of the risks associated with new start-ups by allowing competitors to invest in their new businesses. In new markets, entrepreneurs must be willing to put up with risks that outweigh their personal risk tolerance. What constitutes a risk is determined by an entrepreneur by observing his or her own tolerances. Risks must be determined by entrepreneurs based on the findings of focus groups with other entrepreneurs in the same industry.

What constitutes a risk is determined by an entrepreneur by observing his or her own tolerances.

The largest group of new business owners is ________. women retired men Hispanics Asians

Women

Carla is a high-net-worth individual who was once an entrepreneur. She now financially invests in small start-ups and businesses. Though Carla funds their initial operations and advises them on the best way to develop their operations, she rarely interferes with their day-to-day operations. In the context of the various forms of equity funding, Carla is most likely a venture capitalist. an asset lender. an investment banker. a business angel.

a business angel.

A small business owner must possess all of the following except passion for starting a business. necessary skills to run the business. an in-depth understanding of the market. a sequential formula.

a sequential formula.

Several successful businesspeople establish a partnership with each other. They combine their financial resources and use the resultant pool of resources to make equity investments in various high-growth new undertakings. In the context of equity funding, the partnership and the pooled resources of the businesspeople are best described as supplier credit. a venture capital fund. None of the answers is correct. an asset lease arrangement.

a venture capital fund

In the context of entrepreneurial businesses, which of the following is an advantage that small businesses have over big businesses? ability to produce small niche products ability to be financially flexible a diverse pool of workers large-scale manufacturing

ability to produce small niche products

In the context of legal forms of business, a Subchapter S Corporation treats the owners of the firm as advisory members with little say in the operations of the firm. treats the owners of the firm and the firm itself as the same entity. allows the owners to treat the income of the firm as part of their personal incomes. gives the owners of the firm virtually unlimited liability for its debts and liabilities.

allows the owners to treat the income of the firm as part of their personal incomes.

The development and implementation of a new business is part ________ and part ________.

art; science

The World Bank estimates that one of the strongest factors in the growth of any nation's GNP (gross national product) is ________. the presence of large businesses the presence of higher tariffs global trading the presence of small and medium-sized enterprises

the presence of small and medium-sized enterprises

Job advertisements written for a new hire should be kept concise and should communicate the culture of the firm. give maximum information needed for a potential applicant. contain the current challenges faced by the industry. be similar to the generic advertisements placed every week.

be kept concise and should communicate the culture of the firm.

When forming a sole proprietorship or a partnership, the business debts are the responsibility of the firm's equity investors. paid by purchase order. paid the first day of the month. the responsibility of the owners.

the responsibility of the owners.